Ultra-deepwater ships poised to join the fleet

January 1, 2013

Atwood AdvantageThe Atwood Advantage dockside at Daewoo’s yard in South Korea.

The newest ultra-deepwater drillships joining the fleet this year will be capable of working in 12-14,000ft (3658-4267m) water depths and drilling to 40,000ft. Ultra-deepwater has been defined as water depths of 1500m or greater (deepwater is between 400m and 1500m).

For the five-year period 2011-15, Wood Mackenzie projects that capital expenditure for exploration and production in ultra-deepwater will grow 12% annually. Proven reserves in ultra-deepwater require a drilling fleet capable of operating in these extreme depths, so there is a push to continue newbuild programs.

Two yards in South Korea, Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries (SHI), have each received a steady stream of orders. More surprising is the volume of orders going to Sembcorp Marine’s new Estaleiro Jurong Aracruz shipyard in Brazil.

Triple order

Houston-based Atwood Oceanics has three ultra-deepwater drillships under construction in South Korea, to be delivered 2013, 2014 and 2015. Atwood’s wholly owned subsidiary, Alpha Eagle, entered into turnkey construction contracts with Daewoo Shipbuilding in 2011/12.

The three ships will be dynamically-positioned (DP3), with dual derricks, capable of operating in water depths to 12,000ft and drilling to 40,000ft. They will be classed by DNV and registered in the Marshall Islands.

Two yards in South Korea have received a steady stream of orders. More surprising is the volume of orders going to a shipyard in Brazil. Nina Rach explains the details.

two dereksTwo derrick barges move the Atwood Advantage's drilling derrick into place.

The first construction contract, for the Atwood Advantage drillship, was announced in January 2011, with delivery scheduled for September this year, at a total cost of about $600 million. The ship will have enhanced technical capabilities: a seven-ram blowout preventer; three, 100 ton-knuckle boom cranes; a 165-ton active-heave ‘tree-running’ knuckle boom crane; and 200 person accommodation.

In September last year, Atwood announced the first work contract for the Atwood Advantage, with Noble Energy. The drillship is scheduled to be delivered from the DSME shipyard in September, after which it will mobilize for about 80 days to its first location in the eastern Mediterranean. The three-year contract with Noble, at $584,000/d, is worth $639 million, and begins after the initial mobilization period.

The second construction contract, for the Atwood Achiever, was announced in October 2011, and the drillship is to be delivered June 2014, at a cost of about $600 million. The Atwood Achiever will be similar to the previously announced Atwood Advantage.

The third construction contract, for the Atwood Admiral, was announced in September last year, and the drillship is to be delivered in March 2015, at a cost of about $635 million. The vessel will be similar to both the Advantage and the Achiever, although it will have two, seven-ram BOPs, instead of the single BOP carried on its sister ships.

Rob Saltiel, president and CEO of Atwood Oceanic, comments, ‘We are pleased to continue our growth strategy through the exercising of our option with DSME shipyard, and we look forward to the Atwood Admiral joining our high-specification, ultra-deepwater drilling fleet. This rig’s state-of-theart capabilities, and the synergies that result from adding a third drillship based on the same design, make this a solid platform for extending Atwood’s market position in ultra-deepwater drilling.”

Atwood has an option to construct a fourth ultra-deepwater drillship at a similar cost to the Atwood Admiral, for delivery in December 2015, which requires commitment by 30 June.

Additional four

Ocean Rig UDW has been operating since 2001, and has drilled 135 wells for 25 clients in those 11 years. The company is expanding its fleet with four newbuild ultra-deepwater drillships to be delivered 2013-15, calling them ‘seventh-generation’. These will join the existing fleet of six vessels: two semisubmersibles and four ultra-deepwater drillships. All four of the new drillships are being built at SHI’s yard in South Korea. Ocean Rig estimates 60 days for mobilization from Korea to drilling locations and acceptance testing.

All the drillships are sister ships, with common equipment, spare parts, and training standards, designed to operate in water depths of 10,000-12,000ft. They will be capable of drilling to 40,000ft, with dual derricks, and will be equipped with six- and seven-ram BOPs.

The first newbuild, Ocean Rig Mylos, will cost $670 million and is due to be delivered in July. Ocean Rig’s first contract for the drillship is with Repsol Sinopec Brasil for three years at $608,000/day, with two additional, one-year options (through 2018). Ocean Rig estimates 92 drilling days for this rig in 2013.

The next newbuild, Ocean Rig Skyros, will cost $669 million and is due to be completed in 4Q 2013, with no work contract yet.

The third newbuild, Ocean Rig Athena, will cost $679 million. The drillship is also scheduled to be delivered late this year, and Ocean Rig has signed a letter of intent for an initial three-year contract and two additional, one-year options (through 2018) with a major US oil company for work in Angola.

In October last year, Ocean Rig announced a new contract to construct a fourth seventh generation ultra-deepwater drillship at SHI, for $683 million. This is a sister ship to the three currently under construction, and is scheduled to be delivered in January 2015.

The four newbuilds are being built for an average cost of $675.25 million each – nearly $100 million less than the previous four drillships (sixth generation) delivered to Ocean Rig in 2011, which cost an average of $772 million each: OCR Mykonos ($784 million); OCR Poseidon ($792 million); OCR Olympia ($757 million); and OCR Corcovado ($755 million). With these reduced construction costs and what seem to be solid day rates, it appears to be a good time to build.

Fleet expansion

Seadrill, established in 2005, manages a fleet of semisubmersibles, jackups and three ultra-deepwater drillships, with two ultra-deepwater newbuilds to be delivered the first half of this year from Samsung’s yard, and seven more under construction (four at Samsung and three in Brazil).

Ben Bollinger, director of marketing for Seadrill Americas, spoke at INTSOK’s most recent US-Norway Technology Partnership Conference in Houston, where one of the themes was ‘Stretching the Limits of Proven Technologies’. He said that the challenges post-Macondo include incorporating redundant systems, providing greater load capacities and meeting new requirements for BOPs and ROVs. The company is focusing on eliminating single-point failures in every critical path.

West AurigaSeadrill’s ultra-deepwater West Auriga and West Vela are sister ships under construction at Samsung Heavy Industries’ yard in South Korea.

The three most recent newbuilds to join Seadrill’s fleet, West Capella, West Gemini and West Polaris, were also built at Samsung and delivered in 2008-2010. The West Capella, owned by Mosveld Drilling, is Samsung Saipem 10000 design, capable of working in water depths to 10,000ft and drilling to 37,500ft. The West Gemini and West Polaris, owned by Seadrill, are Samsung SHI S10000 design, capable of working in water to 10,000ft and drilling to 35,000ft.

seven deepwaterSeven ultra-deepwater drillships are under contract to be built at the Estaleiro Jurong Aracruz shipyard in Brazil.

In November 2010, the company announced that it had placed orders for the two new drillships, with Samsung, in a turnkey contract valued at $1.08 billion. Seadrill said the total project price per rig would be less than $600 million, which includes project management, drilling and handling tools, spares, capitalized interest, and operations preparations.

According to Seadrill’s Fleet Status Report, the West Auriga will be delivered in March and in transit through June this year. Sister ship West Vela, will be delivered in June and in transit through September. Both ships are apparently destined for as-yet-unannounced, long-term contracts, with the next availability for the West Auriga listed as beginning October 2020, and West Vela in January 2021.

The West Auriga and West Vela will be capable of drilling in water to 12,000ft and to a total depth of 40,000ft. Both feature dual derricks and hook load capacity of 1250 tons. They will be the fi rst ships out of the Samsung yard equipped with seven-ram BOP stacks.

Seadrill has four other drillships at the Samsung yard, all Samsung SHI S10000 design, capable of drilling in 12,000ft water depth: West Jupiter, West Neptune, West Saturn and West Tellus.

Seadrill will also manage the three ultra-deepwater drillships under construction at Sembcorp Marine’s Estaleiro Jurong Aracruz shipyard in the Brazilian state of Espirito Santo. These are Jurong Shipyard’s proprietary Jurong Espadon design, capable of working in 10,000ft water depth and drilling to 40,000ft. They will each feature a 40m-wide main deck, DP3, and offer accommodation facilities for a 180-man crew.

Guarapari Drilling, Netherlands, a subsidiary of Sete Brasil Participacões SA, signed the first construction contract, worth US$792.5 million, with Sembcorp Marine in February 2012, and subsequent contracts in August and in November for $806.4 million each.

Sete Brasil now has a total of seven drillships on order.

Jason Saw Koon Khim, offshore & marine analyst at DMG & Partners Securities in Singapore, said the first contract price was about 30% higher than drillship prices from shipyards in South Korea, which ‘provides sufficient buffer to cater for the additional risk of building a drillship in Brazil’.

All the Brazilian-built drillships will initially work for Petrobras in the Santos Basin, under 15-year contracts.

In the future, Bollinger expects to see more clarity in regulations, more focus on competency assurance and industry standardization, increased drilling equipment capacity, and the phase-out of older drilling platforms from the deep and ultra-deepwater markets. OE